A UNITED STATES DEPARTMENT OF COMMERCE PUBLICATION FURNITURE STORES fi 1 ■ ■ 1 U.S. 11 DEPARTMENT 3® of If COMMERCE H Economic jSI Development m& Administration jra Office of fg Minority Business y|j Enterprise ilia H '■"'" : ■■'■■■■' *■ HHBi For sale by Superintendent of Documents, U.S. Government Printing Office Washington, D.C., 20402 - Price 25 cents URBAN BUSINESS PROFILE FURNITURE STORES SIC 5712 April 1972 EDA-72-59589 Prepared for ECONOMIC DEVELOPMENT ADMINISTRATION in cooperation with OFFICE OF MINORITY BUSINESS ENTERPRISE U. S. DEPARTMENT OF COMMERCE Washington, D.C. 20230 Peter G. Peterson, Secretary c Robert A. Podesta, Assistant Secretary in for Economic Development a I o John L. Jenkins, Director Office of Minority Business Enterprise 9 This report was prepared by Boise Cascade Center for Community Development, Washington, D.C., under contract with the Office of Economic Research, Economic Development Administration. The statements, findings, conclusions, recommendations, and other data in this report are solely those of the contractor and do not necessar- ily reflect the views of the Economic Development Administration. FOREWORD As part of a continuing program to provide encouragement and assistance to small business ventures, the U.S. Department of Com- merce is issuing a series of Urban Business Profiles. It is hoped that these reports will serve as a meaningful vehicle to introduce the prospective small urban entrepreneur to selected urban-oriented businesses. More specifically, a judicious use of these profiles could: provide a potential businessman with a better understanding of the opportunities, requirements, and problems associated with particular businesses; provide guidelines on types of information required for location-specific feasibility studies; assist urban development groups in their business creation activities. Robert A. Podesta Assistant Secretary for Economic Development Table of Contents Page I. Recommendation 1 II. Description 1 A. Identification 1 B. Dimensions 2 C. Characteristics 2 The Product and the Customer — Operations — Competition — Ease of Entry — Capital Require- ments — Profitability — Dependence on Outside Factors III. Feasibility Analysis 8 A. Key Factors 8 Management — Capital — Market Location — Floor Space — Salesmanship — Customer Relations — Credit B. Problems and Potentials for Minority Ventures 9 C. Projections 10 Small Store — Moderate-sized Store IV. Establishing the New Business 11 A. Establishing the Market 11 B. Determining Size of Operation 12 C. Getting All the Facts 13 D. Securing Capital . . 14 E. Starting Operations 14 V. Summary 15 APPENDIX — BIBLIOGRAPHY/TRADE ASSOCIATION OFFICE OF MINORITY BUSINESS ENTERPRISE (OMBE) AFFILIATES URBAN BUSINESS PROFILES URBAN BUSINESS PROFILE Furniture Stores (SIC 5712) I. RECOMMENDATION Sustained market demand in the furniture industry offers attractive opportunities for new business development in the furniture retail field. With rising incomes, increasing population, and new housing predicted for the 1970's, furniture store sales are expected to rise throughout the decade. Key determinants of profitability in the business include the ability to select styles and lines which appeal to customers, ample floor space to display merchandise, adequate storage for inventory, a good sales force, and access to a line of credit with which to finance purchases on relatively favorable terms. Managers must also give close attention to control of key elements of cost, such as inventory, advertising, wages and rent. Undercapitalization and shrinkage of working capital are major causes of failure. There are many sources of information and help in furniture retail- ing. Organizations such as the National Home Furnishings Associa- tion provide members with assistance in store layout, advertising, sales training, and cost control. There are also many professional buying organizations which can help in the selection of proper mer- chandise. Thus, an individual who has a flare for retailing, manage- ment skills, and a fundamental knowledge of interior decoration should be able to establish and operate a furniture store successfully, provided he has picked his location carefully and is properly fi- nanced. II. DESCRIPTION A. Identification Furniture stores Standard Industrial Classification (SIC) 5712 are described as establishments primarily engaged in the retail sale of household furniture. Many such stores also sell floor coverings, major appliances, and such home furnishings as lamps, draperies, decorative art objects, and mirrors. Types of furniture sold include upholstered furniture such as chairs and sofas, wood pieces, bed- ding, dining room pieces, dinettes, children's furniture, and the like. B. Dimensions There are presently about 27,000 furniture stores in the United States and, in addition, a great number of department and discount stores which handle furniture as part of their product line. The in- dustry is a major factor in the economy, with 1967 retail sales amounting to about $6.5 billion and a 1967 payroll of $231 million for the 180,000 furniture retail employees. Industry sales are expected to rise to $9 billion by 1975, reflecting growing income, increasing use of credit (making possible the fi- nancing of additional furniture purchases), and construction of new housing. The family formations which will occur as the members of the baby boom of the early 1950's reach adulthood are expected to bolster furniture demand for much of the decade. The furniture retail industry is still characterized primarily by the small retailer. About three out of every four stores had fewer than eight employees in 1967, and 94 percent of the stores had fewer than 20 employees. The predominance of the small store is also re- flected in sales figures; one out of every five stores does more than $100,000 of business annually and only one out of 20 stores has sales exceeding $500,000 per year. The trend in the industry, nevertheless, is towards larger stores. Es- pecially in urban areas with adequate markets, furniture stores are expanding product lines so as to better service the total furniture needs of the more affluent customers. This trend can be inferred from the fact that, though the total number of stores has not changed significantly in recent years, the total number of employees has grown considerably. C. Characteristics 1 . The Product and the Customer A complete furniture store will display and sell living room furni- ture, including sofas, chairs, recliners, convertibles, credenzas and ta- bles; bedroom furniture, including beds, mattresses, and springs, dressers, and night tables; dining room furniture, including tables, chairs, buffets, and serving tables; dinettes, floor coverings, chil- dren's furniture, major appliances, decorative art objects, mirrors, clocks, porch and outdoor furniture, odd chairs, hassocks, desks, card tables, bars, and lamps. A furniture store sells a way of living and life style to its custom- ers. Most homemakers have great aspirations for fixing up their homes to their hearts' desires. Their homes are not only to be used, but to be displayed. Women take pride in their homes and like to show them to others. To many families, a home symbolizes success and "the good life." The homemaker usually has plans for a change or for. improve- ment. Items to be purchased are seldom bought on impulse, but are thought about carefully and discussed in the home and with friends. Almost two-thirds of all purchases are made to replace items already owned. Convenience in shopping is a relatively minor factor. Fami- lies will make a furniture purchase in the store where they feel they will get the most value in appearance and style for the amount of money they have available. Most purchases of furniture involve a relatively large commitment of the family funds, and two-thirds of all purchases are made by a husband and wife buying together. Credit is generally involved in the purchase. Many stores finance credit sales themselves and make an additional profit thereby. Others "sell" a portion of their install- ment "paper" to financial institutions. The salesman is important to the furniture buyer. She asks his ad- vice on color, texture, groupings. She is often unsure of how a par- ticular piece will fit into her grouping, and she will seek confidence from the salesman that her choice is a good one. A furniture retailer who has sold customers quality merchandise in the past can often depend on his customers returning, particularly if the relationship is maintained on a satisfactory basis while the installment payments are being made. Almost half of all families in the United States earning over $4,000 annually will make at least one purchase of an item of furniture (in- cluding mattresses/bedsprings and floor coverings) a year. About one out of every 10 customers is under 25 years of age, and about 15 percent of the customers are over 55. Well over half of the cus- tomers are in the prime 25 to 44 year age bracket. Forty percent of the customers will own their own homes. Eighty-six percent of the purchases will be for homes and the balance for apartment units, although with the rising number of apartment units being built, this ratio should change in the coming years. It should also be kept in mind that these percentages are on a national basis and could be expected to vary in specific areas. Most customers learn about a store from discussions with family and friends, window shopping, or advertising. Many get specific ideas from furniture ads in magazines, from magazine articles, or from seeing furnishings in other homes. Most customers do not buy by brand name, and many are unable to quote a brand name. The main reasons for selecting a particular store are store reputation, price, and assortment. Store reputation counts most heavily among shoppers in specialized furniture stores, while price is a more important factor among chain department store shoppers. The average sale in the furniture industry is about $160. 2. Operations The successful furniture retailer should have these attributes: a. Taste and Skill in Selecting and Displaying Merchandise. The ultimate determinant of whether or not a sale is made is whether the customer is attracted to the product. The owner/ manager must see to it that his merchandise will appeal to his market and that it is displayed in a way which will induce his customers to want the merchandise for their homes. b. Good Salesmanship. Retailing is basically selling. An or- der-taker will not do for a furniture store. The salesman must know his merchandise and how to sell. c. Ability To Learn and Keep Abreast of Changes. The success- ful furniture retailer must be willing and able to learn from pub- lished material on the industry and successful practices in retail- ing, and he must be sensitive to changes in style and taste. d. Hard Work and Attention to Detail. There are many things which can go wrong in retailing. Deliveries aren't made on time. Credit accounts are not handled properly. Merchandise is dam- aged. Inventory is shrinking without explanation. Displays need to be changed. Overstock needs to be reduced. Advertising de- cisions are required. Special promotions are needed. The owner of a retail store must be alert to all these matters. He must watch his cost ratios. He must pay his bills and collect his out- standing accounts. He will have to work long hours and at least 6 days a week. e. Ability To Understand and Make Decisions on the Basis of Figures. A successful merchant must be sensitive to his books and accounts so that he can determine the actions which make money for him and those which are losing propositions. Basi- cally, these decisions can be made on the basis of an analysis of his sales and costs. But the individual who does not easily un- derstand accounts and numbers may find it difficult to under- stand what is happening to his business. A good sales force is essential to successful operation of a furniture store. This requires continuous training. A good salesman will like to work with customers and will be appropriately patient while the homemaker ponders her decision. The salesman must know his products thoroughly; he must know the essentials of inte- rior decoration, such as color, texture, form, arrangements, and space requirements; and he must know how to communicate this knowledge to the customer in a helpful and constructive manner which leads to a sale. There are different arrangements for compensation. Some stores have a commission arrangement for salesmen; others have a straight salary; and others have a combination. Salaries vary considerably from place to place and depend a good deal upon the experience of the salesman. Thus an inexperienced salesperson in a relatively low-wage area might receive $80 to $90 per week, while a topflight experienced salesperson with interior decorating skills in a higher wage area might receive as much as $12,000 to $14,000 annually. 3. Competition Furniture stores not only compete among themselves, but they also compete with appliance stores, stores specializing in floor cov- erings, department stores, chain department stores, discount chains, and specialty stores selling homefurnishings of various kinds. Within inner cities, there is also competition from stores offering purported bargains at inflated prices and high credit rates. These stores may advertise special bargains as an inducement to bring shoppers into the store, but the salesman is generally skillful at steer- ing the shoppers away from the so-called bargain. In many instances, stores of this type sell and resell repossessed merchandise, making their profit on a continuing series of downpayments. Fortunately, this type of operation is gradually being phased out with the increas- ing knowledge of the inner-city consumer and more stringent con- trols by authorities. Highly effective and ethical price competition will be faced from the large chain department stores and mail-order houses. These es- tablishments generally feature relatively high quality merchandise at economy prices. In recent years, they have improved their styling, as well. The furniture retailer must compete with these stores, as he would with department stores and with other furniture retailers, by offering value, style, and efficient service. Maintaining contact with present customers is important, and effective advertising can also be useful in bringing potential customers into a store. The amount and variety of merchandise displayed by a furniture retailer is important in meeting competition. The opportunity to see a wide variety of furnishings will bring the shopper into the store, and the more choices that can be seen, the greater the possibility that the shopper will find something she likes. Thus, there is a trend toward greater and greater floor space on the part of the independ- ent furniture retailer. 4. Ease of Entry The individual who has the attributes and skills for success in fur- niture retailing must nevertheless find the right location and suffi- cient capital before he can enter the industry. The right location is a place that will provide the retailer with ample floorspace at a reasonable price in a market which is growing and not overly saturated with competition. The location must also provide parking space if it is in a suburban area. If it is in the inner city, it must be reasonably accessible to the potential market. Before selecting a location, a careful market survey should be made to de- termine if there is sufficient business to justify the selection. A new entrant, who is properly capitalized and who knows his business, should not be frightened away from establishing a furniture store simply because there is considerable competition already in the area. Unless he is prepared to hold his own in competition with other retailers and the chains, he should not enter the business. Even if competition is relatively scarce at a particular time, he can always expect newcomers or branch outlets of existing firms. A major factor affecting ease of entry will be the ability to secure sufficient capital for inventory and to finance credit purchases. 5. Capital Requirements Capital requirements are usually considerable for a furniture re- tailer. Capital is required for store inventory and supplies, warehouse backup inventory, fixtures and equipment, decorating and carpeting, and installment accounts. Inventory and leasehold improvements for the average independent full-stock furniture store require an invest- ment of about $5 a square foot, or $50,000 for a 10,000-square-foot store doing an annual volume of about $250,000. A store doing this amount of business would need about $100,000 to $150,000 to fi- nance installment sales, of which perhaps 20 percent would be re- quired as an investment by the store itself, with the balance of the debt sold to a financing institution. This would require a total invest- ment in the neighborhood of $75,000 for a store doing $250,000 worth of business annually. There is very little trade credit available for this type of invest- ment. Most suppliers require 30- to 60-day payment or faster, particu- larly for a new entrant in a field where failures are frequent. Some bank financing may be available, although the bank would require additional security, probably in the form of personal guarantees and assignment of personal property and/or a Small Business Administra- tion guarantee. 6. Profitability In 1966, at the height of an expansionary period, retail furniture stores ranked fourth in rate of failure among 23 types of retail estab- lishments studied by Dun & Bradstreet. However, for those establish- ments which do succeed, profitability is generally good. In 1969, a relatively average year, profits before taxes averaged about 5 to 6 percent of sales for all sizes of stores. Gross margin within the industry on sales runs to about 40 per- cent, with many firms earning an additional 4 to 6 percent on credit operations. However, those firms which sell their installment paper do not earn this extra amount. 7. Dependence on Outside Factors Besides replacement sales and increases in consumer income, the retail furniture business is dependent upon growth in population, new family formations, and new housing. The long term trends in all these factors are up. This business is affected by seasonality. Summer is generally slack as are the months of January and February. Most business is ac- counted for in the last 4 months of the year. Therefore, seasonal fac- tors must be accounted for in normal planning. Business cycles also affect furniture sales, but these cyclical factors are not as easily planned for. Home furnishing purchases are post- poned when people are earning less and boom when pent-up demand is released. Thus it would be wise to postpone new entry into the industry at a time when consumers are worried and holding back on expenditures which can be postponed. Experienced store owners generally try to improve their financial strength during pros- perous times in order to withstand recessionary periods. III. FEASIBILITY ANALYSIS A. Key Factors The following are the principal factors which affect performance in retail furniture stores: 7. Management Management must be alert to customer satisfaction and taste and must take care of all the details of a successful retailing operation, including sales training, credit management, advertising, stock con- trol, display, control of pilferage, cost control, and so on. 2. Capital Adequate capital is essential for investment in floor displays and ability to offer installment credit. 3. Market Location The proposed establishment should be situated to serve a growing market, preferably one where consumer disposable income is grow- ing and where new housing is being constructed. While specific lo- cation within such a market is not crucial, the store should be situ- ated where it is convenient to and easily noticed by consumers. 4. Floorspace The volume of business that can be done is closely related to the amount of floorspace available. Newer establishments try to operate from a single floor, but multifloor stores can be successful. A variety of tasteful displays will attract potential customers to the store and provide increased opportunities for salesmen to be successful. 5. Salesmanship All aspects of salesmanship are important. This includes the pos- session of a well-trained, capable sales staff, the use of good adver- tising, and the preparation of good displays. 6. Customer Relations Established customers are a source of repeat business, and install- ment payments provide a way to maintain relationships with these customers. Customers must have confidence in the store's integrity. The store must keep up to date on customers' style preferences. 7. Credit The store must provide for installment credit for purchasers. B. Problems and Potentials for Minority Ventures 7. Problems New ventures into retail furniture are apt to run into problems from unethical competitors, legitimate price competition from the large department chains and discount houses, inadequate capital, and unsuitable locations. Unethical competition can come from the unscrupulous ghetto re- tailer who preys on unsuspecting customers with overpriced shoddy merchandise, "bait" advertising, and quick repossessions. Fast-talking salesmen and apparent "easy credit" often dupe unsuspecting con- sumers into unwise purchases. To the extent that a minority furniture retailer will be looking to the minority community for his prime market, he will be faced with serious competition from the department store chains and discount houses. Minority community shoppers usually have lower than aver- age disposable incomes and are less able to afford more expensive furniture lines. Thus, they have a greater tendency to purchase the economical, budget-priced furniture of the department chains and discount stores. Minority entrepreneurs have traditionally experienced difficulty se- curing adequate capital for their ventures, and without adequate fi- nancial resources, entry into the retail furniture business should be dismissed as a possibility for a minority entrepreneur. The average time it takes to receive goods from a supplier is 6 to 12 weeks. If a dealer has only a small credit line, his order will not be processed until the line is paid off or brought down to his credit limits. Small dealers without adequate capital are often forced to buy from sup- pliers whose furniture lines do not provide as much value as those who are more successful and more stringent on credit. An undercapitalized furniture retailer will not be able to stock suf- ficient inventory to attract the more affluent customer. He will not be able to deliver merchandise to customers as rapidly as some of his competitors and will lose many sales for this reason. He will have difficulty securing financing for his installment sales, and he will lose customers to more securely financed operations. His equipment and fixtures will deteriorate more readily and detract from the overall ap- pearance of his store. He may not be able to advertise competitively. The entrepreneur who seeks to serve the inner-city minority mar- ket may find it difficult to secure adequate space in a suitable loca- tion. Many downtown shopping areas have become seedy and do not provide an appropriate atmosphere for the purchase of home furnishings. Moreover, problems of fire insurance and crime are magnified in a downtown location. For all these reasons, minority entrepreneurs have not made a sig- nificant penetration into the retail furniture industry. In an industry which has over 27,000 establishments, there are less than 100 which are owned by minority entrepreneurs or less than one-half of 1 per- cent. Only one black-owned furniture store does an annual gross of over $1 million and most do under $200,000 of business annually. 2. Potentials There is an awakening self-consciousness among minority consum- ers that could lead to consumer preference toward minority entre- preneurs. Thus, a furniture store offering good value and located within a minority community might be preferred by many minority homemakers over a chain department store, or a large suburban-ori- ented independent furniture retailer. Recent improvements in financial packages available for minority entrepreneurs may also improve the potential for a minority busi- ness. Various civic groups have been organized in many cities to help minority entrepreneurs, and these may be able to assist the pro- tential new businessman by helping him to do his advance planning and to secure necessary lines of credit. Special sources of capital and business planning assistance are available to businesses in many cit- ies, and these may help an entrepreneur overcome the handicaps of inadequate capitalization. New minority-owned banks are becoming more capable of financing consumer installments and providing lines of credit for retailers. C. Projections The following figures represent financial projections which are typical for many furniture retailers. Individual stores may vary widely from these percentages, and each individual situation should be studied carefully on the basis of its own conditions. Two potential situations are projected: one, a smaller store with a volume approxi- mating $200,000 annually; and the other, a moderate-sized store with a volume of about $600,000. 10 Situation Amount 1 Percent Situation Amount 2 Percent Gross sales $208,000 104 $636,000 106 Returns and allowances 8,000 4 36,000 6 Annual volume 200,000 100 600,000 100 Cost of merchandise 120,000 60 348,000 58 Gross margin 80,000 40 252,000 42 Income from credit operations 6,000 3 24,000 4 Operating expenses (total) 70,000 35 240,000 40 Net profit from operations 16,000 8 36,000 6 Deductions from income (interest, bad debts, etc.) 6,000 3 12,000 2 Net profit before taxes 10,000 5 24,000 4 Typical investment 75,000 200,000 Return on investment 13.3 12 Profits and return on investment from furniture stores vary much more among stores within a certain size range than they do among the averages of different size ranges. This suggests that size, itself, is not a dominant factor in profitability. Other factors such as manage- ment, reputation, and location are much more important. The following are some key indicators for the two sizes of stores: Situation 1 Situation 2 Installment sales as a percentage of total sales 84% 80% Installment accounts receivable as a percentage of installment sales 63% 58% Bad debts charged off on installment accounts as a percentage of installment sales 1% 1% Amount of average sale $140 $180 Dollar sales per square foot of selling space $ 28 $ 32 Sales per employee $34,000 $35,000 Sales per salesman $100,000 $128,000 Sales per handling and delivery employee $105,000 $107,000 Ratio of assets to liabilities 2.6X 3.0X Net sales per $ of net worth $ 1.90 $ 2.00 IV. ESTABLISHING THE NEW BUSINESS A. Establishing the Market The first step in starting a new furniture store is to determine the market which the store is intended to serve. The prospective entre- preneur must identify the general type of consumer he proposes to cater to. For example, he may wish to locate in the inner city and make his appeal largely to inner-city minority residents; or he may wish to take a location which is on the fringes so that he can cater 11 not only to the inner-city population, but to some suburban popula- tion or inner-city residents moving to the fringes of the city. He may wish to cater to young marrieds starting out in small apartments or he may desire to sell more to established homemakers and residents of single family homes. Whatever the decision, it will affect where the new store is to be located, how large it should be, what its total market is, and what kind of furniture lines it should carry from the standpoint of both styles and price. For example, young marrieds may want the more modern styles with vivid colors and economical prices; more mature families may prefer Early American and may be willing to pay higher prices for more substantial furniture. When the character of the market is determined, the entrepreneur should determine its potential size. There are various local statistics available which can be used to clarify how many people with certain characteristics live within shopping range of various potential loca- tions, how much they spend annually on furniture, how their in- comes are changing, and the like. Market data may be available from local chambers of commerce, planning commissions, or councils of government. The feasibility of a new store may be glimpsed in the following way. Visit the furniture stores in the same shopping area, as well as the department stores. Determine what types of customers they try to serve. Make a list of each one and estimate how much floorspace each has. Using estimates of sales per square foot, either locally used or industrywide (about $30 of sales per square foot), es- timates can be made of total sales volume for each competitor. These can be compared to the estimated total furniture purchases for the market, providing insights into the volume which might be achieva- ble in the store being planned. For example, if the estimated sales volume of all stores based upon square footage is considerably more than the total estimated purchases in the market area, it is likely that the market is oversaturated with furniture stores. The general procedure to be followed in selecting a store location begins with the identification of several potential locations where space is known to be available, the computation of the number of potential customers within the shopping area of each location, and the determination of the amount of annual expenditures on furniture that each will make. An analysis of competition in each area will suggest where underserved markets exist. B. Determining Size of Operation The size of the proposed business will be determined by the size of the market, the amount of competition which can be expected, 12 the available capital resources, and the amount of experience of the proposed management. These should be carefully weighed against each other. For instance, even though a large market is anticipated, the proposed store should not be larger than the capital resources which the individual has available to support it. Moreover, if the proposed entrepreneur is somewhat inexperienced, he may be wiser to make his mistakes learning the business in a smaller operation that is more securely financed, than in a larger operation in a precarious financial position. C. Getting All the Facts The prospective new entrepreneur should collect all necessary in- formation supporting his business plan prior to his presentation to potential sources of capital. Here are some of the items which should be contained in this analysis: Address of proposed location or possible locations Landlord's name Total building area Amount of sales space on each floor Amount of office space Amount of warehouse space needed Parking spaces Term of lease required and options to renew Annual rent Minimum Percentage of sales Amount of rent in advance Estimated sales First year Third year Cost of occupancy — first year and third year Annual minimum rent Other costs of insurance, taxes, maintenance payable by tenant Other costs of occupancy — water, heat, power, etc. Total occupancy costs Percentage of sales Investment required Store inventory and supplies Warehouse inventory Fixtures and equipment Decorating and carpeting Installment accounts less amount to be financed Other receivables Operating data Estimated sales Delivery expense Credit service charges Warehouse costs Gross profit Accounting, credit, and administrative costs Selling payroll Operating profit Other payroll Interest costs Fringe benefits Net profit Store occupancy costs Return on investment (percentage of Advertising profit to investment) 13 D. Securing Capital A number of cities have organizations which specialize in assisting minority entrepreneurs to secure capital. A prospective entrepreneur should seek out these sources and go over his plans with them. The local Small Business Administration office or OMBE affiliate may help to put the prospective entrepreneur in touch with sources of capital and to provide the names of banks which have made mi- nority loans. Minority-owned banks may also provide capital. The Small Business Administration can also be helpful with a lease guarantee. Many landlords are unwilling to lease to an inexperienced and new businessman, because they have no recourse in the event the business fails. The SBA has a program to reassure such landlords by insuring the lease of the small businessman. E. Starting Operations The new businessman should seek experienced help in completing negotiations with the landlord. There are a number of variables to the standard lease which many real estate organizations are willing to grant but which are not offered if the tenant does not ask for them. An experienced businessman or lease negotiator can be useful during these negotiations. Help should be requested from a local or- ganization specializing in assisting minority entrepreneurs. Unless the prospective entrepreneur is very experienced in the trade, he should investigate affiliation with an established buying off- ice. Such an office is worth its cost in advising the businessman on lines to carry and in taking the time to visit the various furniture markets to be on the lookout for good buys. A buying office cannot substitute for the businessman's own knowledge of his customers and their taste, but it can be a valuable and profitable supplemen- tary service, particularly to the small furniture retailer who cannot take the time and expense to visit all the markets. Every effort should be made to have attractive displays of furniture ready for the opening. There are many articles and books on display and layout, and these should be studied carefully and the recom- mendations should be adapted to the particular store. It is more im- portant to spend original capital on display inventory, fixtures, and proper displays than on warehouse inventory. In most cases, custom- ers are willing to wait several weeks for merchandise, and shipments from the factory can generally be secured in ample time. Warehouse inventory should be used for special purchases and fast sellers. If the sales force is inexperienced, careful time and attention should be paid to their training. If the entrepreneur himself has nei- 14 ther the time nor the ability to give this training, outside help should be secured. It is essential that the sales staff be first rate. The businessman should spend considerable time and money planning for the opening. Special values should be featured. Even special gifts or prizes should be purchased and given to persons coming into the store during the opening days. Advertising which is appropriate to the size of the store and the investment available should be prepared and used. Advertising is extremely important in bringing customers to the store. V. SUMMARY Although it is a difficult business, demanding long hours and con- stant supervision, furniture retailing does offer the individual with an interest in furniture and a talent for selling an opportunity to enter a business which has growth and profit potential. Moreover, to the ex- tent that minority homemakers can be persuaded to give shopping preference to stores which are owned by members of the same mi- nority and located in the same community, such stores would have a competitive advantage to offset traditional disadvantages associated with inadequate capital resources and limited experience in business management. In summary, sound management, a trained sales force, and ade- quate financial resources are keys to success in furniture retailing. 15 APPENDIX BIBLIOGRAPHY References A HOME FURNISHINGS CONSUMER STUDY AMONG BUYERS AND INTENDING BUYERS. A research report prepared for the Home Furnishings Marketing and Research Council, Inc., National Fam- ily Opinion, Inc., July 1967. THE HOMEMAKER AND HOME FURNISHINGS. A research report prepared for the Home Furnishings Marketing and Research Council, Inc., Social Research, Inc., July 1967. THE IMPACT OF INDUSTRY ACTIVITIES ON CONSUMER PURCHAS- ING OF HOME FURNISHINGS. A research report prepared for the Home Furnishings Marketing and Research Council, Inc., Ar- thur D. Little, Inc., July 1967. HOW TO PLAN THE "IDEAL" HOME FURNISHINGS STORE. A re- print from NRFA Reports to the Home Furnishings Industry, June 1968. STORE EXPANSION: KEY TO PROFIT GROWTH. A reprint from NRFA Reports to the Home Furnishings Industry, January 1968. THE HOME FURNISHINGS INDUSTRY: TRENDS TO 1975. Stanford Research Institute, July 1965. Government Publications FURNITURE RETAILING, Small Business Bibliography No. 48, Small Business Administration, Washington, D.C. 20416, April 1967, 8 pp., free. SELECTED INDUSTRY PROFILES, PART V, FURNITURE STORES, pre- pared for the Small Business Administration by Business and De- fense Services Administration, U.S. Department of Commerce Washington, D.C. 20230, April 1969. Note: Small Business Bibliography No. 48, referred to above, con- tains a list of additional bibliographies of government and nongovernment publications which would be of use to a prospective furniture retailer. A list of trade journals and trade associations is also furnished. 16 TRADE ASSOCIATION The principal trade association for the retail furniture owner is the National Home Furnishings Association (NHFA) (formerly the Na- tional Retail Furniture Association), 1150 Merchandise Mart, Chicago, Illinois 60654. The NHFA provides detailed confidential services to members on trends in the industry, promotion and advertising, store planning, operating experiences, and other special subjects of inter- est to the retailer. The association offers management services, including an inven- tory control system, a recruitment and selection service, successful techniques for selling, and successful operating techniques. The asso- ciation also holds continuing sales education and management work- shops, represents the industry in Washington, and offers members low-cost group life insurance. 17 OFFICE OF MINORITY BUSINESS ENTERPRISE (OMBE) AFFILIATE ORGANIZATIONS Albuquerque National Economic Development Association (NEDA) 1801 Lomas, N. W. Albuquerque, N. M. 87104 508/843-2386 Victor M. Casaus, Regional Vice President Atlanta Atlanta Business League (NBL) 329 Walker Street, S. W. Atlanta, Georgia 30314 404/524-5449 Franklin F. O'Neal, Executive Director Wendell White (OMBE Representative) 404/526-6304 Baltimore Morgan State College Minority Business Enterprise Project 2108 North Charles Street Baltimore, Maryland 21218 301/685-0610 Ralph j. Ross, Executive Director Boston The Roxbury Small Business Development Center 126 Warren Street Roxbury, Massachusetts 02119 Bernard Wiley — Acting Executive Director 617/427-6333 Frank Bispham (OMBE Representative) 617/223-2381 Chicago Chicago Economic Development Corporation (CEDC) 162 North State Street, Suite 600 Chicago, Illinois 60601 231/368-0011 Garland Guice, Executive Director 18 Bennett Johnson, Jr. (OMBE Representative) 312/353-4460 NEDA 537 Dearborn South Chicago, Illinois 60605 312/939-2607 Gilbert M. Vega, Regional Vice President Cincinnati Determined Young Men 3880 Reading Road Cincinnati, Ohio 45229 513/221-0180 Merven Stenson, Executive Director Cleveland Greater Cleveland Growth Corporation 690 Union Commerce Building Cleveland, Ohio 44115 216/241-4313 Melvin Roebuck, Executive Director Minority Economic Developers Council (MEDCO) 10518 Superior Avenue Cleveland, Ohio 44106 Armond L. Robinson, Administrator Dallas Dallas Alliance for Minority Enterprise (DAME) 7200 North Stemmons Freeway Suite 1006, UCC Tower Dallas, Texas 75222 214/637-5170 Walter Durham, Executive Director Denver Colorado Economic Development Association (CEDA) 1721 Lawrence Street Denver, Colorado 80202 303/255-0421 Edward Lucero, Executive Director Detroit Inner City Business Improvement Forum (ICBIF) 6072 - 14th Street Detroit, Michigan 48208 313/361-5150 Walter McMurtry, President El Paso NEDA First National Building Suite 10B 109 North Oregon Street El Paso, Texas 79901 915/533-7423 Jose Manuel Villalobos, Regional Vice President Indianapolis Indianapolis Urban League 445 North Pennsylvania Street Indianapolis, Indiana 46204 317/639-5391 or 253-5418 Sam Jones, Executive Director Kansas City Black Economic Union (BEU) 2502 Prospect Kansas City, Missouri 64127 816/924-6181 Curtis McClinton, President NEDA 703 North 8th Street Kansas City, Kansas 66100 913/342-6663 Richardo Villalobos, Regional Vice President Los Angeles South Central Improvement Action Committee (IMPAC) 8557 South Broadway Los Angeles, California 90003 213/751-1155 Louis Wilson, Director The East Los Angeles Community Union (TELACU) 1330 South Atlantic Boulevard Los Angeles, California 90022 213/268-6745 Claude Martinez, Director of Development NEDA 5218 East Beverly Boulevard Los Angeles, California 90022 213/724-6484 Silvestre Gonzales, Regional Vice President Jack Wilburn, Coordinator 213/824-7691 Powell McDaniel (OMBE Representative) 213/824-7715 Joseph Luna (OMBE Representative) 213/824-7715 Memphis Memphis Business League (NBL) 384 E. H. Crump Boulevard Memphis, Tennessee 39126 901/574-3213 Leonard J. Small, Sr., Project Director Harold Jones (OMBE Representative) 901/534-3216 Miami NEDA 8551 Coral Way Suite 307 Miami, Florida 33155 305/221-5531 Dr. Antonio Machado, Regional Vice President Newark MEDIC Enterprises, Inc. 287 Washington Street Newark, New Jersey 07102 201/642-8054 New Haven Greater New Haven Business and Professional Men's Association 226 Dixwell Avenue New Haven, Connecticut 06511 Gerald S. Clark, Executive Director 203/562-3819 New York Puerto Rican Forum, Inc. 156 Fifth Avenue New York, New York 10010 212/691-4150 Hector I. Vasquez, Executive Director 19 New York (continued) Richmond Capital Formation, Inc. 215 W. 125th Street, Room 313 New York, New York 10027 Hirom C. Cintron, Director, Harlem Office 212/222-9650 Brooklyn Local Economic Development Corporation (BLEDCO) 1519 Fulton Street Brooklyn, New York 11216 212/493-1663 Preston Lambert, Executive Director NEDA 19 West 44th Street Room 407 New York, New York 10036 212/687-1128 David J. Burgos, Regional Vice President Philadelphia Entrepreneurial Development Training Center 1501 North Broad Street Philadelphia, Pennsylvania 215/763-3300 Alphonso Jackson, Director Phoenix NEDA Amerco Towers 2721 North Central Suite 727 South Phoenix, Arizona 85004 602/263-8070 Joseph Sotelo, Regional Vice President Pittsburgh Business & Job Development Corporation (BJDC) 7800 Susquehanna Street Pittsburgh, Pennsylvania 15208 412/243-5600 Forrest L. Parr, President Marian Diggs (OMBE Representative) 412/644-5529 National Business League 700 North Second Street Richmond, Virginia 23219 703/649-7473 Allen Roots, Acting Project Director San Antonio NEDA 1222 North Main Street Kallison Tower, Room 422 San Antonio, Texas 78233 512/224-1618 Cipriano F. Guerra, Jr. Regional Vice President Jesse Rios (OMBE Representative) 512/225-5511 San Francisco Plan of Action for Challenging Times (PACT) 635 Divisadero Street San Francisco, California 94117 415/922-7150 Everett Brandon, President Seattle United Inner City Development Foundation 1106 East Spring St. - Xavier Hall Seattle, Washington 98122 206/626-5440 Wilson Gulley, Executive Director Washington, D. C. Mayor's Economic Development Committee (MEDCO) 1717 Massachusetts Ave., N. W., Room 704 Washington, D. C. 20036 202/667-6480 Michael D. Wallach, Director, Business Assistance Center Curley King (OMBE Representative) 202/967-5051 Howard University's Small Business Guidance & Development Center Post Office Box 553 Washington, D. C. 20001 202/636-7447 Dr. Wilford White, Director 20 OU.S. GOVERNMENT PRINTING OFFICE: 1972-721/928/704 Profiles of urban businesses are for sale at listed prices by the Superintendent of Documents, U.S. Government Printing Office, Washington, D.C. 20402. Beauty Shops (25 cents) Bowling Alleys (30 cents) Building Service Contracting (30 cents) Children's and Infants' Wear (25 cents) Contract Construction (30 cents) Contract Dress Manufacturing (25 cents) Convenience Stores (25 cents) Custom Plastics (30 cents) Dry Cleaning (25 cents) Furniture Stores (25 cents) Industrial Launderers & Linen Supply (30 cents) Machine Shop Job Work (30 cents) Mobile Catering (25 cents) Pet Shops (30 cents) Photographic Studios (25 cents) Real Estate Brokerage (25 cents) Savings & Loan Associations (30 cents) Supermarkets (30 cents) Preparing a Business Profile (20 cents) PENN STATE UNIVERSITY LIBRARIES ADDDD7D LlEbbfl